CHAPTER FIVE Consumer markets & consumer buying behavior Lecturer: NNA 1

Chapter Learning Outcomes Topic Outline 5.1 Model of Consumer Behavior 5.2 Characteristics Affecting Consumer Behavior 5.3 Types of Buying Decision Behavior 5.4 The Buyer Decision Process 5.5 The Buyer Decision Process for New Products Ch 5 -2 Copyright © 2011 Pearson Education

Copyright © 2011 Pearson Education Consumer Behavior Consumer Buyer Behavior and Consumer Market Consumer buyer behavior refers to the buying behavior of final consumers—individuals and households who buy goods and services for personal consumption. Consumer market refers to all of the personal consumption of final consumers. Ch 5 -3 Copyright © 2011 Pearson Education Note to Instructor Discussion Question What have you recently purchased that cost over $100? Write down all the reasons you purchased this particular item. Because students are all consumers—it is interesting to start the class with a discussion of products they have recently purchased. When you ask them why they purchased a particular item or product, you can bring them through many topics in this chapter including the characteristics that affect consumer behavior (cultural, social, personal, and psychological). You can also try to determine the process they went through including how and where they searched for information and how they evaluated their alternatives. Finally, ask them how they feel about their purchase (postpurchase behavior). This discussion will lead nicely to the next slide which is the Model of Buyer Behavior.

Model of Consumer Behavior STIMULI PROCESSING RESULT Ch 5 -4 Copyright © 2011 Pearson Education

Characteristics Affecting Consumer Behavior Copyright © 2011 Pearson Education

Characteristics Affecting Consumer Behavior Cultural Factors Culture is the set of basic values, perceptions, wants, and behavior learned from family and other important institutions. e.g: Asian Culture African Culture Arab Culture American Culture Chinese Culture etc. Subculture are groups of people within a culture with shared value systems based on common life experiences and situations. e.g: Hispanic Subculture in American culture Note to Instructor Real Marketing 5.1 discusses McDonald’s challenges in the Arab world. McDonald’s is currently operating in 14 Arab countries. A key element in McDonald’s strategy is to adapt its traditional American approach to local culture, food habits, and lifestyles. For example, in some countries of the Arab world, McDonald’s outlets are divided along male and female lines in accordance with local custom. As well as adapting the restaurants themselves, McDonald’s tailors its menu to meet the food culture or preferences of different countries. The McDonald’s menu varies widely in different parts of the world. In the Arab world, for example, the company launched ‘McArabia,’ a product that McDonald’s intended to match regional tastes and preferences. Ch 5 -6 Copyright © 2011 Pearson Education

Characteristics Affecting Consumer Behavior Cultural Factors Social classes are society’s relatively permanent and ordered divisions whose members share similar values, interests, and behaviors. Measured by a combination of occupation, income, education, wealth, and other variables. Cross cultural marketing is the practice that includes ethnic themes & cross cultural perspectives within their mainstream marketing. Note to Instructor Real Marketing 5.1 discusses McDonald’s challenges in the Arab world. McDonald’s is currently operating in 14 Arab countries. A key element in McDonald’s strategy is to adapt its traditional American approach to local culture, food habits, and lifestyles. For example, in some countries of the Arab world, McDonald’s outlets are divided along male and female lines in accordance with local custom. As well as adapting the restaurants themselves, McDonald’s tailors its menu to meet the food culture or preferences of different countries. The McDonald’s menu varies widely in different parts of the world. In the Arab world, for example, the company launched ‘McArabia,’ a product that McDonald’s intended to match regional tastes and preferences. Ch 5 -7 Copyright © 2011 Pearson Education

Characteristics Affecting Consumer Behavior Social Factors Groups and Social Networks Membership Groups Groups with direct influence and to which a person belongs Aspirational Reference Groups Groups an individual wishes to be like Associative Reference Groups Groups include people who more realistically represent the individuals’ current equals or near-equals Dissociative Reference Group group includes people that the individual would not like to belong to Note to Instructor Discussion Question What groups are you a member of and what are your aspirational groups. How does this influence you as a consumers? Ch 5 -8 Copyright © 2011 Pearson Education Reference: University of South California

Characteristics Affecting Consumer Behavior Social Factors Word-of-mouth influence and buzz marketing Opinion leaders are people within a reference group who exert social influence on others Also called influentials or leading adopters or early adopters Marketers identify them to use as brand ambassadors Buzz Marketing: Enlisting / creating opinion leaders & use them as brand ambassadors Word of Web Note to Instructor It is a great idea to click through to the BuzzParadise Web site. It is an excellent example of Buzz marketing. Ask students if they tend to have a “go to” person when they want to purchase. Would they consider themselves opinion leaders? A great group to ask about is middle school aged kids. Who are the opinion leaders here? What qualities do they possess? Ch 5 -9 Copyright © 2011 Pearson Education

Characteristics Affecting Consumer Behavior Social Factors Online Social Networks are online communities where people socialize or exchange information and opinions: Blogs Social networking sites (Facebook) Virtual worlds (Second Life) Note to Instructor: Discussion Question How can marketers use these networks? This slide should provide a lively discussion for students because they all are users of social networks. Ask students for examples they have seen or experienced. Then be sure to ask if they think the marketing efforts were effective for the marketer and why? P&G for example set up Ch 5 -10 Copyright © 2011 Pearson Education

Characteristics Affecting Consumer Behavior Social Factors Family is the most important consumer-buying organization in society. Social roles and status are the groups, family, clubs, and organizations that a person belongs to that can define role and social status. Note to Instructor Discussion Question What brands do you purchase because it is what your parents used? Why do you think this occurs? Ch 5 -11 Copyright © 2011 Pearson Education

Characteristics Affecting Consumer Behavior Personal Factors Age and life-cycle stage: People change the goods and services they buy over their lifetimes Tastes in food, clothes, furniture, and recreation are often age related Buying is also shaped by the stage of the family life-cycle—the stages through which families might pass as they mature over time Ch 5 -12 Copyright © 2011 Pearson Education

Characteristics Affecting Consumer Behavior Occupation affects the goods and services bought by consumers. Economic situation includes trends in: Personal Factors Personal income Savings Interest rates Ch 5 -13 Copyright © 2011 Pearson Education

Characteristics Affecting Consumer Behavior Personal Factors Lifestyle is a person’s pattern of living as expressed in his or her psychographics. Measures a consumer’s AIOs (activities, interests, opinions) to capture information about a person’s pattern of acting and interacting in the environment. Note to Instructor Lifestyle: BlackBerry has achieved initial success by attracting consumers with an interest in a cool lifestyle and social networking. Discussion Question What categories of products seem to be targeted to consumer’s lifestyles? They will realize many products in addition to cars including food, cosmetics, shampoo also appeal to a consumer’s lifestyles. Ch 5 -14 Copyright © 2011 Pearson Education

Characteristics Affecting Consumer Behavior Personal Factors Personality and self-concept Personality refers to the unique psychological characteristics that lead to consistent and lasting responses to the consumer’s environment: Self-confidence, Sociability, Autonomy, Defensiveness, Adaptability, Aggressiveness. Self-concept or self-image premise is that people’s possessions contribute to and reflect their identities—that is, ‘we are what we have’. Ch 5 -15 Copyright © 2011 Pearson Education

Characteristics Affecting Consumer Behavior Brand Personalities Sincerity: Down-to-earth, honest, wholesome, and cheerful Excitement: Daring, spirited, imaginative, and up-to-date Competence: Reliable, intelligent, and successful Sophistication: Upper class and charming Ruggedness: Outdoorsy and tough Note to Instructor It is interesting to talk about brand personalities and ask students the personality of several brands: A brand personality is the specific mix of human traits that may be attributed to a particular brand. One researcher identified five brand personality traits 1. Sincerity (down-to-earth, honest, wholesome, and cheerful) 2. Excitement (daring, spirited, imaginative, and up-to-date) 3. Competence (reliable, intelligent, and successful) 4. Sophistication (upper class and charming) 5. Ruggedness (outdoorsy and tough) Ch 5 -16 Copyright © 2011 Pearson Education

Characteristics Affecting Consumer Behavior Psychological Factors Motivation Perception Learning Beliefs and attitudes Ch 5 -17 Copyright © 2011 Pearson Education

Characteristics Affecting Consumer Behavior Psychological Factors Motivation A motive is a need that is sufficiently pressing to direct the person to seek satisfaction. Motivation research refers to qualitative research designed to probe consumers’ hidden, subconscious motivations. Note to Instructor An aging consumer who buys a sporty convertible might explain that he or she simply likes the feel of the wind in his or her thinning hair. At a deeper level, the person may be buying the car to feel young and independent again. Ch 5 -18 Copyright © 2011 Pearson Education

Characteristics Affecting Consumer Behavior Copyright © 2011 Pearson Education

Characteristics Affecting Consumer Behavior Psychological Factors Perception is the process by which people select, organize, and interpret information to form a meaningful picture of the world from three perceptual processes. Selective attention Selective distortion Selective retention Note to Instructor Selective perception: It’s impossible for people to pay attention to the thousands of ads they’re exposed to every day, so they screen most of them out. Discussion Question If you watched television last night, what ads do you remember seeing? Probe to find out why they remember certain ads—was it that they broke through the clutter, that they saw them many times, or that they are in the market for that certain product? Ch 5 -20 Copyright © 2011 Pearson Education

Characteristics Affecting Consumer Behavior Psychological Factors Selective attention is the tendency for people to screen out most of the information to which they are exposed. Selective distortion is the tendency for people to interpret information in a way that will support what they already believe. Selective retention is the tendency to remember good points made about a brand they favor and forget good points about competing brands. Ch 5 -21 Copyright © 2011 Pearson Education

Characteristics Affecting Consumer Behavior Psychological Factors Learning is the change in an individual’s behavior arising from experience and occurs through interplay of: Drives Stimuli Cues Responses Reinforcement Ch 5 -22 Copyright © 2011 Pearson Education

Characteristics Affecting Consumer Behavior Psychological Factors Beliefs and Attitudes Belief is a descriptive thought that a person has about something based on: Knowledge Opinion Faith Ch 5 -23 Copyright © 2011 Pearson Education

Characteristics Affecting Consumer Behavior Psychological Factors Beliefs and Attitudes Attitudes describe a person’s relatively consistent evaluations, feelings, and tendencies toward an object or idea. Ch 5 -24 Copyright © 2011 Pearson Education

Types of Buying Decision Behavior Complex buying behavior Dissonance-reducing buying behavior Habitual buying behavior Variety-seeking buying behavior Ch 5 -25 Copyright © 2011 Pearson Education

Types of Buying Decision Behavior Ch 5 -26 Copyright © 2011 Pearson Education

The Buyer Decision Process Need Recognition Occurs when the buyer recognizes a problem or need triggered by: Internal stimuli External stimuli Ch 5 -27 Copyright © 2011 Pearson Education

The Buyer Decision Process Information Search Sources of Information Personal sources—family and friends Commercial sources—advertising, Internet Public sources—mass media, consumer organizations Experiential sources—handling, examining, using the product Ch 5 -28 Copyright © 2011 Pearson Education

The Buyer Decision Process Evaluation of Alternatives How the consumer processes information to arrive at brand choices. Depends on the individual consumer and the specific buying situation. Note to Instructor This Web link brings you to PriceGrabber—an online comparison shopping site. What is interesting on this site is on the left hand side, you can search by features. These features help a consumer know how to evaluate a product. For instance, this example is laptop computers and one can search by processing speed, processor type, screen size, etc. Ch 5 -29 Copyright © 2011 Pearson Education

The Buyer Decision Process Purchase Decision The act by the consumer to buy the most preferred brand The purchase decision can be affected by: Attitudes of others Unexpected situational factors. Post-Purchase Decision The satisfaction or dissatisfaction that the consumer feels about the purchase. Relationship between: Consumer’s expectations Product’s perceived performance The larger the gap between expectation and performance, the greater the consumer’s dissatisfaction

The Buyer Decision Process Post-Purchase Decision Cognitive dissonance is the discomfort caused by a post-purchase conflict. Customer satisfaction is a key to building profitable relationships with consumers—to keeping and growing consumers and reaping their customer lifetime value. Ch 5 -31 Copyright © 2011 Pearson Education

The Buyer Decision Process for New Products New Product and Adoption Process A New Product is a good, service, or idea that is perceived by some potential customers as new. Adoption process is the mental process an individual goes through from first learning about an innovation to final regular use. Ch 5 -32 Copyright © 2011 Pearson Education

The Buyer Decision Process for New Products Stages in the Adoption Process Awareness Interest Evaluation Trial Adoption Ch 5 -33 Copyright © 2011 Pearson Education

The Buyer Decision Process for New Products Influence of Product Characteristics on Rate of Adoption Relative advantage Compatibility Complexity Divisibility Communicability Ch 5 -34 Copyright © 2011 Pearson Education